There are a few things to take into consideration before you open an account. This would peg down your options in choosing companies that suit your requirement list. You may also look into reviews of various traders who had an experience with specific brokers.
Note: It is generally not recommended to open accounts with NFA and CFTC regulated U.S. based forex brokers. Your trading may be affected by the undue rules inflicted upon these retail forex brokers which may include reduced leverage levels, the “no-hedging” and “first in first out” rules.
1. Word of Mouth: Look into any previous traders’ reviews regarding brokers. Get an idea of the customer care and service they offer.
2. Customer Protection: Check whether the brokers are regulated or not. If they are then by which organization and what security is assured to the client. Look into their protections measures against client fund frauds and bankruptcy.
3. Execution: Check the business model they follow; Market Maker, ECN or no-dealing desk broker. Look into their speed of order execution and whether the system is manual or automated. Check their maximum trading size essential for becoming eligible for requesting a quote. Check the clients’ trades offset they offer.
4. Spread: Check as to how small it is and whether it is fixed or variable.
5. Slippage: Check the expected measure of slippage in moving markets (for both normal and fast).
6. Margin: Check their margin requirement; e.g. 0.2% margin = max 500: 1 leverage. Check whether their margin requirements alter for various currency pairs or the various days of the week. See the issuing condition of margin call by broker and whether there is the same margin for small or standard accounts.
7. Commissions: Generally spread is inclusive of the commissions of market makers. So see whether the broker charges commissions other than the spread.
8. Rollover Policy: Check whether there is a requirement of minimum margin for earning rollover interest, the swapping rates of currencies and the conditions to satisfy for earning rollover interest.
9. Trading Platform: Check out the extent of its use being intuitive or functional. Check their disconnecting status during the trading hours and reliability during fast moving markets and delivery of news. Check the number of available trading currency pairs and that whether the brokers offer an API to clients for automating business trades. Check for any additional features offered by brokers?
10. Trading Account: Check out the minimally required balance for opening account, the minimum trade size. Check whether clients can set up the standard size of the lot that is traded and whether they are able to earn interest on the unused margins in their accounts.
